North Korea’s overseas diplomatic missions broker trade and investment deals through their economic and trade counselor’s departments and collect commission fees on transactions, according to a recently obtained document.
The government can legally collect fees of up to 5 percent on successful deals, which are then used to fund diplomatic mission budgets.
Daily NK recently obtained a copy of “Regulations on Economic and Trade Counselor’s Departments, Economic Cooperation Groups, and Economic Working Delegations for Foreign Economic Affairs” (Cabinet Decision No. 49) adopted by North Korea’s Cabinet on July 1, 2020.
According to the regulations, economic and trade counselor’s departments mediate trade and economic cooperation activities between North Korean institutions and local businesses in host countries, collecting fees for these services. Articles 14 and 15 specifically state these departments can receive a percentage of export sales or business profits when they facilitate transactions.
Commission rates include 2-5 percent of sales for developing export markets, 2-5 percent of annual North Korean profits for joint ventures or technical cooperation projects, and 1-3 percent of profits for processing trade arrangements.
The fees serve not merely as income but help fund diplomatic missions’ operating budgets.
Article 2 defines the Economic and Trade Counselor’s Department as “a state diplomatic mission’s economic diplomacy department that handles economic diplomacy to actively promote exchanges and cooperation in economic and trade affairs with North Korea’s host country (including concurrent countries), and oversees and guides foreign economic activities of Economic Cooperation Groups and Economic Working Delegations within the host country.”
Economic Cooperation Groups are organizations stationed in other countries for economic purposes, including branches of trading companies, representative offices, overseas investment enterprises, technical cooperation agencies, and foreign construction companies. Economic Working Delegations are organizations dispatched to other countries to conclude foreign economic contracts, attend exhibitions, training, study tours and other economic activities.
The counselor’s departments’ duties extend beyond commercial brokerage to include collecting information essential for North Korea’s development.
Article 12 emphasizes their role in “bringing in prosperity materials urgently needed for the country’s economic development and improving people’s living standards.” “Prosperity materials” refers to practical and technical information from outside sources, including production processes, management methods, and advanced technologies and equipment.
The regulations also include provisions for incentives (bonuses) for staff of missions who successfully bring in such materials, suggesting North Korea’s eagerness to acquire foreign technology.
While bonus amounts aren’t specified, the regulations mention that a central science and technology administrative guidance agency evaluates these “prosperity materials.”
The document strongly emphasizes confidentiality in all foreign economic activities conducted by the Economic and Trade Counselor’s Departments, with Article 17 explicitly stating, “Economic and Trade Counselor’s Departments must establish a strict confidentiality system to prevent leaks during foreign economic activities.”
A Korean language version of the document obtained by Daily NK can be found here.
This article first appeared in Daily NK, which contacts multiple sources inside and outside North Korea to verify information. The Diplomat was not able to verify the claims independently.